* Better-than-expected US data boosts stocks
* Euro up 1 pct vs dollar; Dollar index hits 3-month low
* Oil above $81/barrel; gold up
* US Treasuries fall on improved risk appetite
By Manuela Badawy
NEW YORK, Aug 2 (Reuters) - Global stocks surged to a 2-1/2
month high on Monday, supported by better-than-expected U.S.
economic data and encouraging corporate results, including
strong European bank earnings, while the euro broke above a key
technical level.
The U.S. manufacturing sector grew in July for the 12th
straight month and at a rate that was slightly better than
expected, while U.S. construction spending unexpectedly rose
0.1 percent in June as increased investment in public projects
offset the 15th straight monthly decline in private
non-residential construction, reports showed.
The upbeat data boosted crude oil and gold prices and
pushed the euro up against the dollar to hit its highest since
May, while government bonds were pressured as investor
sentiment improved and lifted appetite for risky assets.
"What we've seen over the last few weeks has been decent
earnings, but economic data has been on the weak side. But
today we had good earnings out of Europe, and we actually had
strong economic data, and that is piling on to a decent start
to the month," said Ryan Detrick, senior technical strategist
at Schaeffer's Investment Research in Cincinnati, Ohio.
The Dow Jones industrial average <> was up 175.67
points, or 1.68 percent, at 10,641.61. The Standard & Poor's
500 Index <.SPX> gained 19.68 points, or 1.79 percent, to
1,121.28. The Nasdaq Composite Index <> rose 39.68
points, or 1.76 percent, to 2,294.38.
The MSCI world equity index <.MIWD00000PUS> rose above 2
percent, reaching a two-and-a-half month high, while the
Thomson Reuters global stock index <.TRXFLDGLPU> gained 1.97
percent. Emerging stocks <.MSCIEF> rose 2.13 percent to a
three-month high.
The FTSEurofirst 300 index <> surged 2.57 percent as
upbeat results from BNP Paribas <BNPP.PA> and HSBC <HSBA.L>
boosted optimism for corporate earnings.
BNP Paribas, France's biggest listed bank, rose 5 percent
after posting higher-than-expected second-quarter net profit
thanks to lower loan provisions and strong retail banking,
which offset the impact on its business of volatile financial
markets.
HSBC said its half-year profits hit $11.1 billion, more
than double the $5 billion a year ago, sending its shares up
more than 5 percent.
EURO'S MOVE
The euro <EUR=> rose to $1.3176, up 1 percent on the day
and its best level against the greenback since early May.
Analysts said euro buying gained momentum after the currency
broke $1.3125. That was the 38.2 percent retracement of a
decline that began last November and ended in June around
1.1876, its lowest level since 2006.
The dollar edged up against the yen after the Institute for
Supply Management said U.S. manufacturing activity did not slow
as much as economists had predicted in July. The dollar rose to
86.75 yen <JPY=> from around 86.50 yen before the data.
The dollar index however, hit a three-month low, hurt by
worries that the U.S. economy's recovery is losing steam.
The index, which measures the greenback's value against a
basket of currencies, hit a three-month low of 81.354 <.DXY>,
dipping 0.70 percent to 80.965, roughly a 50 percent
retracement of its November-to-June rally.
"We're seeing a disconnection as U.S. data stays weak yet
risk appetite is strong. Weak U.S. data will translate into
risk aversion at some point," said Tom Levinson, currency
strategist at ING.
Sterling hit a six-month high versus the dollar <GBP=D4> of
$1.5820 and outpaced the euro <EURGBP=D4>, rising to a
four-week high of 82.64 pence.
U.S. Treasury debt prices fell, with the 30-year bond
shedding a full point in price after the stronger-than-expected
growth in the manufacturing sector in July.
The 30-year Treasury bond <US30YT=RR> was trading one point
lower in price to yield 4.05 percent, up from 3.99 percent late
on Friday, while benchmark 10-year notes <US10YT=RR> were 11/32
lower to yield 2.95 percent from 2.91 percent. The 2-year U.S.
Treasury note <US2YT=RR> was down 1/32, with the yield at
0.5697 percent.
U.S. crude oil <CLc1> rose $2.41, or 3.05 percent, to
$81.36 per barrel, while spot gold prices <XAU=> rose $7.30, or
0.62 percent, to $1187.70 an ounce as the euro firmed and oil
prices gained.
(Additional reporting by Leah Schnurr and Steven Johnson in
New York, Neal Armstrong in London; Editing by Dan Grebler)
